OPEC's crude oil production surged last month as Persian Gulf members restored exports through the Strait of Hormuz amid a peace accord between the US and Iran, according to a Bloomberg survey.
Output from the Organization of the Petroleum Exporting Countries rose by 2.34 million barrels a day to 18.75 million a day, with the gains driven by Kuwait, Saudi Arabia and Iran, the survey showed. The rebound still leaves production considerably below prewar levels.
Even before the peace deal, Persian Gulf producers had found ways to sneak cargoes out through the strait, which was largely shuttered in the early stages of the conflict. With the US-Iran agreement now allowing for more overt transit, Saudi shipments have reached 90% of typical rates, tanker-tracking data show.
The uptick in supply — coming while fuel demand in key consumer China remains subdued — is creating a surplus in parts of the market, erasing crude's wartime rally and raising the question of whether OPEC nations will need to compete for customers. Brent futures traded near $72 a barrel on Friday.
The group's June production was still 7.3 million barrels a day, or 28%, below February levels, when adjusted for the United Arab Emirates' exit.
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The UAE quit OPEC in May, giving it the freedom to pump at will once the strait fully stabilizes. Iraq also briefly threatened it could exit unless eventually given a higher output quota by the organization.
Sunday Meeting
Major members of the wider OPEC+ alliance, which includes countries such as Russia, are due to hold a monthly video conference on Sunday to discuss output limits for the month ahead.
This subgroup of seven nations has announced a series of small and symbolic production increases during the war to continue a process — if only theoretically — of restoring output halted a few years ago. Two delegates said this week they expect another small hike in quotas of 188,000 barrels a day in August, the penultimate monthly stage in that process.
The survey showed that Kuwait posted the biggest increase among OPEC's 11 members last month, boosting output by 870,000 barrels a day to 1.36 million a day. The country's production was slashed 80% by the conflict and still remains significantly below typical rates.
The next-biggest gain in June was in Saudi Arabia, which raised output by 550,000 barrels a day to an average of 7.2 million a day. That was followed by Iran, which hiked by 510,000 a day to pump 2.85 million a day, and has accumulated a hoard of supply on tankers at sea as it struggles to find buyers.
In the wider alliance, Russia has bolstered crude exports to record levels following Ukrainian strikes on its refineries, potentially diverting volumes that can't be processed at home.
Bloomberg's production survey is based on ship-tracking data, information from officials and estimates from consultants Rapidan Energy Group, FGE NexantECA, Kpler Ltd. and Rystad Energy AS.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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